Lincoln Property Co., N.C., Inc. v. Travelers Indemnity Co

In Lincoln Property Co., N.C., Inc. v. Travelers Indemnity Co. (2006) 137 Cal.App.4th 905, the plaintiff, Lincoln Property Co., N.C., Inc. (Lincoln) brought an insurance bad faith action. The trial court sustained without leave to amend the defendant insurer's demurrer under the doctrine of res judicata. (Lincoln, supra, 137 Cal.App.4th at p. 911.) The court concluded Lincoln's complaint impermissibly split a single cause of action by alleging breach of the duty to defend in a cross-complaint, and then filing a subsequent insurance bad faith complaint based on the same facts. (Ibid.) Before Lincoln filed its complaint, the trial court had already granted summary judgment on Lincoln's cross-complaint. (Id. at p. 910.) The Lincoln court concluded that since both actions involved the same primary right and same parties, it was improper to split the two claims, even if some of the alleged wrongful conduct did not occur until after the first action (the cross-complaint) was filed. (Lincoln, supra, 137 Cal.App.4th at pp. 913, 916.) The Lincoln court stated that Lincoln should have amended its cross-complaint to add the insurance bad faith cause of action since it could not be litigated in a separate action. (Lincoln, supra, 137 Cal.App.4th at pp. 913, 916.)